Airline Fees = Ticket Tax Avoidance

By Scott Spangler on March 6th, 2023

During the State of the Union Address, President Joe Biden said he wanted to crack down on airline “junk fees” that airlines added to their ticket prices. Given the motivation for the ever expanding menu of these fees, I’m not holding my breath for their demise. Simply put, these fees are exempt and do not contribute to the price of a ticket that’s subject to the 7.5% tax that airlines pay to support the national aviation infrastructure. General aviation pays its way with taxes on avgas and Jet-A.

This reality is rarely mentioned in media coverage of the junk fee vendetta. It is easier—and attracts a larger audience for the advertising media (are clicks and page views the media’s junk fees?) than digging into the history of the subject. Or maybe it doesn’t matter because avoiding taxes that support an industry-supporting culture is so commonplace that it is considered the American way. Given the frequency of airline close calls and railway disasters, it sure seems to be the case lately. Or maybe it is just coincidence.

In a thumbnail history, airline junk fees were born with airline deregulation in the 1980s, which introduced low-fare lines to the marketplace. To compete, the legacy lines subtracted their costs for baggage (and everything else, over time) and provided for the service that used to be covered by the ticket price. And when the government let them use this scheme to reduce their ticket tax bill, the new era soon became firmly entrenched.

Last year the Department of Transportation published a notice of proposed rulemaking that would “require U.S. air carriers, foreign air carriers, and ticket agents to clearly disclose passenger-specific or itinerary-specific baggage fees, change fees, and cancellation fees to consumers whenever fare and schedule information is provided to consumers for flights to, within, and from the United States.”

Really, it doesn’t matter if this proposal becomes a final rule. Either way, passengers will still have to pay the fees, the fees are still exempt (as far as I can discern), and the airlines are still getting away with their ticket tax avoidance to support an aviation infrastructure designed with them as first in line. If we really want to be fair about it to all Americans, add a line to the NPRM that makes the total cost of the ticket and all of its fees subject to the infrastructure-supporting ticket tax. –Scott Spangler, Editor


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